Commodities: Energy futures dip as traders react to weaker US factory PMI

Energy futures weakened following the release of an unexpectedly weak reading on US manufacturing for September that some economists showed the "havoc" that the US-China trade war was wreaking on the American economy.

The ISM institute's factory sector Purchasing Managers' Index fell from a reading of 49.1 for the month of August to 47.8 in September (consensus: 50.1).

"This survey is a not consistent with recession across the whole economy. But the warning signs here are clear enough," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"The trade war is wreaking havoc, to the point where the incipient upturn in manufacturing in China is not transmitting, at all, to the U.S. This means that if consumers’ confidence seriously falters, the U.S. could tip into the first recession ever caused directly by the actions of the President rather than the action of tight monetary policy on an overstretched private sector."

Against that backdrop, as of 1933 BST, front month Brent crude oil futures were retreating 0.79% to $58.78 a barrel on the ICE, alongside a 2.27% decline in November natural gas on NYMEX to $2.28/MMBtu.

In parallel, the US dollar spot index was trading 0.18% lower to 99.2020 and well off its intra-day highs at 99.6670, while the Bloomberg commodity index was 0.03% lower to 77.76.

As the Greenback came off its highs, gold futures found a bid, with the December contract on COMEX adding 0.92% to $1,486.50/oz..

Copper was moving lower alongside, with the December contract on COMEX down by 0.45% to $2.5670/lb..

Soft commodity prices on the other hand were mostly higher, with December corn on CBoT pacing gains, climbing 0.84% to $3.9125 per bushel.